A newly floated farming company is financed with senior bonds, junior bonds, cumulative non-voting preferred stock and common stock. The new company has no retained profits and due to floods it was unable to record any revenues this year, leading to a loss. The firm is not bankrupt yet since it still has substantial contributed equity (same as paid-up capital).

On which securities must it pay interest or dividend payments in this terrible financial year?

(a) Preferred stock only.

(b) The senior and junior bonds only.

(c) Common stock only.

(d) The senior and junior bonds and the preferred stock.

(e) No payments on any security is required since the firm made a loss.

A highly leveraged risky firm is trying to raise more debt. The types of debt being considered, in no particular order, are senior bonds, junior bonds, bank accepted bills, promissory notes and bank loans.

Which of these forms of debt is the safest from the perspective of the debt investors who are thinking of investing in the firm's new debt?